It is nice here (as a visitor anyway) but I checked house prices and it is not that bad depending where you want to live. Personally I like visiting cities but would not want to live in them: for Melbourne, if I had to live here, I would buy in Olinda and drive to the office. Then again I would never go 5 days a week to the office, more likely I would plan all meetings in one day and work from home the rest.

Olinda is way too far out to make it into the city with any regularity.

After living in various locations all over Melbourne, I now have being within 10 mins walk of public transport as a MUST. (Now I have 2 tram stops almost on my doorstep)

Ah someone from my area - I commute into south bank everyday from Ferntree Gully. I actually don't mind the train trip in. It's a bit further to a train station from Olinda though (assuming that was how you travelled in).

There's a suprising number of tech people out in FG/UFG/Belgrave. At friend's parties out that way there is always a significant number of people in IT.

In any case, my point was more about the importance of being close to public transport: Ferntree Gully has a train station, while Olinda does not.

Olinda is beautiful, as long as you are ok to be on bushfire alert at least a couple of days a year

Like said, I would not work for a company that demands me into an office regurlarly (more than once a week) as it is not needed.

Right now is actually a really good time to buy. The changes made to the building regs a few years ago in several inner city suburbs meant that many new apartment blocks have popped up - driving down the price of everything. Supply and demand.

Yep, runaway house prices... just like the rest of the top 10 cities.

The reason why the house prices are so expensive in these places is because they are good places to live. Good old supply-and-demand at work.

Artificial restrictions on supply, artificially low interest rates (supply of credit) to keep the bubble inflated. Free markets at work. (I am not sure if this is actually the case in Melborne, but it certainly is in many other major cities - London comes to mind).

Yep, Australia has a massive real estate bubble, and when it pops, we're screwed. However, despite all the things you mentioned, people are still willing to pay the pricetag... because those places in the top 10 are nice places to live. If they weren't nice places, they wouldn't be able to leverage the higher prices.